[WELLINGTON] Growth in New Zealand's house prices picked up for a third consecutive month in March, driven by a rise in the country's biggest city, the government property valuer said on Wednesday.
Quotable Value's (QV) residential property price index rose 7.7 per cent in the year to March 31, compared with an annual rate of 6.4 per cent in February.
The index is now 21.3 per cent above the market's previous peak in late 2007.
"The expectation is that Auckland will continue to accelerate while the rest of the main centres will remain steady with values either moderately increasing, staying flat or in some cases declining slightly," said QV spokeswoman Andrea Rush in a statement.
House prices in the Auckland region, where there is a significant housing shortage, were 13.9 per cent higher in the year to March compared with a 13 per cent rise the month before, while prices in earthquake-damaged Christchurch were 5.3 per cent higher against a 3.4 per cent gain the month before.
The government agency said demand for new housing developments remained strong because they are exempt from restrictions on low deposit lending aimed at restraining housing inflation and reducing the risks to banks.
The Reserve Bank of New Zealand is looking at new rules covering lending to residential property investors, who are seen as one of the drivers of the Auckland market, which may increase their cost of borrowing.
The central bank has said it is concerned about signs the housing market may be heating up again, although it has signalled it expects to keep its benchmark rate on hold for some time.